subject: Fewer Americans Think Homes Are Good Investments [print this page] Typically when shopping around for a mortgage loan, consumers spend ample amounts of time comparing rates and quotes, all out of the desire to receive the best deal.
Despite this effort, more Americans say they would be willing to walk away from a bad loan situation to avoid foreclosure. In addition, the way many consumers view their real estate has shifted drastically.
In a recent Harris Interactive survey, nearly half 48 percent of those surveyed said they would feel comfortable walking away from their loans if they knew their home value was less than what they owed, MSNBC reports. Over the course of the last year, this figure has risen 6 percent, and with foreclosures likely to continue in high volumes in 2011, these numbers could rise above 50 percent next year.
"Its a phenomenon we havent seen before in the housing market," Rick Sharga, senior vice president of RealtyTrac, told the news source. "The mindset of why people purchase a home has changed over the past decade."
At the beginning of the decade, home prices were sky high and rising steadily. As a result, many saw their home as an investment, one that if nurtured would yield positive gains for the family. However, since the recession, more Americans have begun to view a home as a utility rather than an investment.
Shagra, who recently took steps to compare mortgage rates for the study, found that $300 billion worth of adjustable rate mortgages are expected to rise over the next year. This could add an extra $1,000 to some consumers' home loans, despite the fact that they are already worth between 30 and 50 percent of the original sale price.
According to third-quarter data from Zillow, which studies the housing market, roughly 23.2 percent of all single-family homeowners now have an underwater mortgage. This means many will have to settle for losses when they finally decide to sell their home.
Consumers looking to save money could compare refinance rates on new home loans to reduce their payments. By taking this step, consumers could earn back hundreds of dollars each month, which could then be put in savings accounts or other savings vehicles.
However, if this is not an option, most major banks, including Bank of America and Wells Fargo, offer loan modification programs that may include temporary interest-only loan payments, or principal reduction until a refinance loan is possible.
Research data from Zillow suggests that home values lost more than $1.7 trillion in 2010.
